Income tax (NDFL): what is it in simple words, types, what is included, who pays

What is personal income tax?

Personal income tax is a tax on personal income. This is exactly what this abbreviation stands for. Currently, this tax is considered the main type of direct taxes. It is imposed on people who receive income on the territory of the Russian Federation or who are located outside its borders from Russian sources.

In accordance with the Tax Code of the Russian Federation, personal income tax payers are:

1. Citizens staying in the Russian Federation for more than 183 days over the next 12 months.

2. Persons receiving income on the territory of the Russian Federation at any location.

Recognition of an individual as a taxpayer is carried out not within the calendar year, but within 183 days from the moment of arrival in the country. Having Russian citizenship is not a prerequisite for paying personal income tax.

It is worth noting that short-term trips abroad of the Russian Federation of up to 6 months do not stop the period of his stay in Russia. Among them:

Military service abroad.
Educational activities.
Business trips.
Vacations.
And others.

The following may serve as confirmation of the length of stay in Russia:

Information about permanent or temporary registration at the place of residence.
Marks in the passport about crossing the state border.
Timesheet data.
Migration card.

Tax benefits

Some income of individuals is exempt from personal income tax.

Preferential categories include:

benefits,
alimony,
one-time assistance for a newborn baby,
compensation for travel costs,
payment for medical services,
money from the sale of a stake in the authorized capital of a Russian company.

The latter is relevant only if the enterprise has been continuously owned by one person for 5 years. Personal income tax may not be paid when reimbursing the costs of paying interest on loans taken to purchase real estate. For the application of norms, the position held by a person does not matter. This is stated in the clarifications of the Ministry of Finance of the Russian Federation dated October 25, 2013.

Speaking about what personal income tax is, it should be noted that there is a benefit for children. This could be a one-time checkmate. assistance that is prescribed during the first 12 months of the baby’s life or from the moment of adoption. Such assistance is received by one or both parents.

Employees also receive benefits upon dismissal by mutual consent or upon retirement. Its size is:

Average earnings for the period of professional activity,
Severance pay.
Compensation cannot be more than 3 times the average salary when paid to the manager or chief accountant.

Why is personal income tax needed?

Like most taxes paid by the population of the country, money from each person's income is sent to the federal budget. Subsequently, they are dispersed according to various social needs and areas. Among them:

Ecology and environmental protection.
Maintenance of the road transport network.
Public order, security and national defence.
Healthcare, physical education and sports.
Development and maintenance of housing.
Development of science, education, organization of the educational process in government institutions.
And many other areas.

Deductions for personal income tax

Deductions are those amounts by which the tax base or, in other words, income can be reduced. At the same time, the amount of personal income tax payable will also decrease. Without exaggeration, almost everyone is concerned about everything related to personal income tax deductions.

There are the following types of deductions (Tax Code of the Russian Federation):

standard (Article 218 of the Tax Code of the Russian Federation);
social (Article 219 of the Tax Code of the Russian Federation);
property (Article 220 of the Tax Code of the Russian Federation);
investment (Article 219.1);
when transferring to future periods losses from transactions with securities and transactions with financial instruments of futures transactions (Article 220.1);
when carrying forward losses from participation in an investment partnership to future periods (Article 220.2);
professional (Article 221).

For a list of tax deduction codes, see here

Moreover, the first three are of greatest interest to taxpayers, and the remaining four are more specific.

Standard deductions are taken into account by the employer when calculating personal income tax . Typically, the accounting department in this case develops an application form and requires employees to provide the necessary supporting documents. To receive social and property deductions, individuals must independently collect a set of documents, submit it to the tax office and, after reviewing these documents, receive from the Federal Tax Service a notification of the right to a deduction, according to which the tax will not be withheld by the employer.

The section “Deductions (NDFL)” contains up-to-date information about all types of deductions and their documentation. And for additional information about property deductions for personal income tax related to the purchase of an apartment, you can refer to our thematic section “Personal income tax for an apartment .

Personal income tax interest rate and calculation procedure.

The following personal income tax rates apply to the income of individuals received in the Russian Federation, as well as from Russian companies:

The interest rate of 9% applies to:

Income received before 2015.
Income from bonds and mortgage-backed certificates before 2007.

The 13% rate is the main one and applies to most types of income of persons, including:

Salaries of employed citizens
Profit from the sale of a car and other property.
Income from renting out plots and premises.
And other types of rewards.

A tax rate of 15% applies to individuals who are not permanently located in Russia, but receive dividends from Russian companies.

A rate of 30% is imposed on all other income of non-resident persons.

A maximum interest rate of 35% applies to income such as:

Gifts, rewards received as a result of winnings.
Increased income on bank deposits and shares.

It is worth noting that the tax rate of 13% is the leading one and applies to most types of income of individuals.

Personal income tax is calculated using the formula:

Amount of personal income tax = Tax rate * Tax base

A tax period is considered to be one calendar year.

Personal income tax: document for reporting

Individual entrepreneurs and large companies that are legal entities still hire employees. This means that they are tax agents and must submit to the tax office the necessary documents, which indicate the labor taxes calculated and actually transferred to the state treasury. In this case, the main document is a certificate called 2-NDFL, which provides information on whether the tax agent has fully fulfilled its obligations to the Russian Federation.

Such a certificate in the accounting department is filled out for each employee separately; the basis for the specified data will be the fact that the employee receives wages or other income from the employer.

Important point! Each tax rate requires the completion of its own 2-NDFL certificate. If an employee receives a salary subject to 13% tax, and he also received money from the sale of a car, form 2-NDFL is filled out twice for him, each certificate reflects its own type of income and its taxation. In the example we indicated, the first certificate, about salary, will be prepared by the employer, the second, about personal income, will be prepared by the payer himself. The document must be prepared in two copies and submitted to the tax office for consideration no later than April 1 (at the end of the reporting period of the year). An example of filling out form 2-NDFL can be found in our article.

Tax base of personal income tax.

The tax base for income tax is determined individually for each type of income, for which different rates are established. It is formed in such a way that all income received by an individual in any form is taken into account. These may include both monetary rewards and in-kind acquisitions.

The tax base is formed as the monetary equivalent of income taxed at the appropriate rate. It can be reduced by the amount of tax deductions for a rate of 13%. For other rates, tax deductions are not taken into account.

If the amount of income is less than or equal to the amount of tax deductions, then the tax base is equal to zero. In this case, the negative value is not carried forward to the next tax period.

In turn, the tax base is calculated exclusively in the national currency of the Russian Federation. If the income was acquired in foreign currency, then it is converted into rubles at the rate of the Central Bank of the Russian Federation on the date of receipt.

We correctly calculate the amount of personal income tax

To avoid imposing a fine for an incorrectly paid amount, it is worth figuring out how to calculate personal income tax. Some will say that the employer does this for most citizens, but at any time you may need to declare income on your own - when you receive winnings, money from the sale or rental of property.

Any payer can calculate the amount of tax

The first step is to quantify the income subject to tax. Next, find out the tax rate for each type of income and calculate the tax base. It was already mentioned above that depending on the type of income, a specific rate is applied, and each rate has its own financial base. The last step, when the named quantities are known, is simple calculations. You need to use the formula specified in the Tax Code of the Russian Federation: multiply the tax base by the tax rate, as a result the total amount of personal income tax will be determined.

When do you need to submit a declaration?

Filing a declaration is required if a person received income for the past calendar year. Income that is subject to personal income tax includes:

Renting residential and other premises, as well as land plots (rooms, apartments, houses, etc.)
Sale of property owned for no more than 3 years (car, apartment and other movable and immovable property).
Gifts, prizes and all kinds of winnings.
Salary, bonus, etc.
Interest on deposits over the established amounts.
Rewards received from foreign sources.
And other income.

The declaration must also be submitted if the person plans to receive a tax deduction.

Objects subject to personal income tax

According to Russian legislation, there are two main objects that are subject to personal income tax. First of all, this is the profit that a resident of Russia receives during the reporting period, regardless of where its source is located - within the country or outside it.

Another object is the profit of non-residents of the country, who, without changing, draw it from Russian sources. In addition to labor income, this includes:

Money paid for work under an official agreement.
Income from the sale of your property, shares in organizations, shares, and so on.
Funds received for the exploitation of the author's rights to intellectual or other property.
Renting out property located in Russia.

By law, you must independently declare your income:

Persons conducting private practice (lawyers, private detectives, notaries).
Persons who received unearned income from the sale or rental of property.
Citizens whose income is transferred from sources outside the country.
IP-schniks.
People who received remuneration from a source that does not have the status of a tax agent.
Heirs of the authors of inventions, works of science or art, receiving rewards.
Citizens who have won money in risk-based games (lotteries).

An important point is that the annual deadline for self-declaring income is April 30th.

When is it not necessary to file a declaration?

Declaration of income is not required if it is received as a result of:

Sales of property owned for at least 3 years.
Receiving property by inheritance or as a result of a gift from close relatives.
Receiving wages from which the employer has already withheld and paid tax.
Government payments in the form of benefits, pensions and subsidies.
Receiving compensation payments, alimony, financial assistance.
Dividends from bank deposits in the Russian Federation.
Receiving maternity capital funds.
And other sources of income.

A complete list of income that is not taxed is in Art. 217 of the Tax Code of the Russian Federation.

When personal income tax is not needed

It is believed that personal income tax or, as it is also called, income tax is deducted from any income, but this is not entirely true - there are certain preferential categories.

So, there is no need to worry about problems with the tax office if a person receives:

Compensation from the state. This could be any payment, for example, compensation for lost housing or benefits after layoffs.
Inheritance or income by gift.
Pensions, scholarships or grants, and alimony.
State benefits, for example, unemployment benefits or child care benefits.
State reward. A striking example is payments to donors or prizes to athletes.

It is worth noting: maternity capital is also included in the category of preferential capital; the tax law does not apply to it.

Deadlines for filing the declaration.

Declaration of income of individuals, as a rule, occurs in two ways:

1. The employer.

13% is withheld from the salaries of the organization’s employees and transferred to the budget.

2. On your own.

In other cases, citizens fill out the declaration form themselves and send it to the tax office.

The 3-NDFL declaration must be filed no later than April 30 of the year following the expired tax period. The document is submitted to the tax authority at the place of registration in printed or electronic form. To submit your declaration online, you can use the State Services portal or the website of the Federal Tax Service.

You can fill out Form 3-NDFL yourself or contact specialized organizations. As a rule, the cost of the service varies from 400 to 2000 rubles.

Download declaration form 3-NDFL.

Violation of the requirements for declaring income and paying taxes entails penalties in the form of fines. So:

For late submission of the declaration, a fine of 5% of the amount of tax payable. This fine is calculated for each month of delay. However, it cannot in total exceed 30%, but also be less than one thousand rubles.
For evasion of personal income tax, a fine of 20% of the amount of tax that should have been paid is provided.

What happens if you don’t pay personal income tax?

The Russian Tax Code clearly establishes sanctions that will be applied to both the tax agent and the individual in the event that personal income tax is paid late or the transfer of funds to the state treasury is completely ignored.

Timely payment of taxes is controlled by law

Thus, tax agents who delay in transferring funds may receive a fine of 20% of the tax amount itself. The state will “charge” the same interest on top if the money is not transferred at all or the calculation is incomplete. Also, arrears and penalties may be withheld from the defaulter. But there is a nuance - if labor income is paid to employees in kind, it is impossible to collect taxes from them, and delay in tax payment, accordingly, cannot happen either. Another point is that the tax agent did not withhold personal income tax from the employees’ income. In this case, he will also face a fine, but without a penalty.

As for individuals, they may also receive a fine of 20% of the tax amount in case of incomplete payment or non-payment. But the law provides for another penalty for deliberate underestimation of taxable income. If an individual specifically indicates a smaller amount in the declaration, he will be subject to a fine of 40% of the actual amount. The law also exempts individuals from fines in case of late payment. But penalties for personal income tax for late payment will be charged.

Didn't manage to submit your declaration on time? Do you want to know what the consequences are for failure to submit reports on time? Read more about the statute of limitations for tax offenses and how to reduce the amount of the fine in our article.

Personal income tax: history and modernity

The modern Russian tax system is unthinkable without a personal income tax. This is one of the few taxes that has a rich history. In anticipation of the rapidly approaching date for submitting tax reports, we invite you to take a break for a while and take a short journey through the pages of the history of personal income tax and remember where it all began.

Where it all started

The ancient ancestor of this tax can be considered tribute . It was a payment levied by the prince, military leaders or victors from the defeated tribe. Tribute was collected in spring and winter in two ways: “by cart” - when it was brought to the prince, and “by polyud” - when the prince or his squad themselves went to collect it.

In essence, the tribute was a kind of input tax, the payers of which had absolutely no rights, which, of course, was actively used by its money-loving recipients. So, N.M. Karamzin wrote that one day Grand Duke Igor, dissatisfied with the size of the tribute just collected from the Drevlyans, returned and began collecting it in the second round. (True, this story ended very sadly for the prince: the angry Drevlyans killed Igor and his entire retinue, but that’s not what our story is about.) You and I are lucky that we live in brighter and more progressive times, aren’t we?